Money orders are not the same as cash and checks (also paper forms of payment) but are a close substitute for them. A money order is prepaid, and this is an advantage over a check, but generally, the question still lies in the heart of many if money orders are safe. In this article, we will see about ‘Are Money Orders Safe?’.
Are Money Orders Safe?
Money orders are a safe way of making transactions instead of using other forms of payments like checks or cash. Money orders are also prepaid, i.e. they are purchased in advance with other forms of payment, e.g. cash from a third party with a small added fee. For a money order to be authorized and issued, the payer’s name is also required with the payee’s name and address. The payer also signs the money order and is given a receipt – this receipt serves as proof of payment to either track the order to know when the money order gets to the payee or cancel the order if there is any fraudulent activity noticed during the transaction. Money orders were taken into the financial system by the Postal Service because they offered a less possible way of being stolen. If stolen or misplaced, they could easily be cancelled, which made them safer than other means of payment. Money orders are generally safer than cash and some other means of payment, so let’s discuss below.
Money Orders Can Easily be Tracked
A receipt is always issued before a money order is sent via mail; this receipt would contain some necessary information like the amount of money being sent, the date the transaction was made, and a code that makes it easy to track. They are safer than cash because if any fraudulent activity is noticed or if misplaced, they can easily be replaced; this is not like cash that cannot be tracked, replaced, or retrieved if stolen. There is also a means of verifying mailed money orders by reaching out to the Money Order Verification System.
Money Orders Protect Vital Information of Payers
Unlike checks that require vital information about the payer like the payer’s name, address, phone number, account number, routing number, etc., before they are issued, a money order just requires the payer’s name. Using a money order helps to guard vital information of a payer for safety purposes, and this makes it more difficult to access a payer’s financial identity, which in turn reduces identity theft.
They are Safer to Mail Than Cash
Money order offers a safer way of sending money through postal service because they are directed to a specific payee, and this reduces the risk of being stolen, unlike cash. Sending cash through the mail is very unsafe as it can be stolen by anybody and used for transactions by anybody. But money orders are specific and can only be cashed out by the specific payee – unless endorsed by the payee with a signature and means of identification.
Payment is Guaranteed Unlike Check
Money orders are prepaid, which means that they are already paid out of a bank account or by other means of payment, and it is guaranteed that a payee can easily get the funds withdrawn. It is unlike a check in which the funds can bounce and can be used for fraudulent transactions, whereas money orders cannot be used as payment is guaranteed.
It Can Be Purchased Without a Bank Account
Money orders can be purchased with cash, and this means that the payer does not need to own a bank account. They can also be gotten from third parties apart from banking institutions like local post offices, retail and convenience stores, Western Union, etc.
Security in Handling Than Cash
For purchasing an expensive item that requires a large amount of cash, it is safer and more secure to make transactions with a money order. This is because it is just a single piece of paper, unlike cash which is bulkier and can attract the attention of thieves. If, in the process of carrying out daily activities, a money order is misplaced, the payer doesn’t panic because it can easily be replaced or tracked, and if stolen, the payer knows that the thief can’t cash it out because it is payee-specific.
Conclusion
Even though money order has some disadvantages, which include a limit on transaction amount, irreversibility of a transaction when they have been cashed, prone to falsification, and difficulty in the purchase, they are still considered one of the safest ways to make transactions by many institutions because they are guaranteed, convenient and least prone to scam.
Frequently Asked Questions
- What is the Maximum Limit of a Money Order?
Generally, money orders most times have a maximum limit of $1000. Therefore, if a buyer needs more than the limit, he must purchase multiple.
- Where Can I Cash Money Orders?
Most financial institutions accept money orders. Other institutions like the Western Union, local post offices, and convenience stores also accept them.
- Can Anyone Cash a Money Order?
Money orders are specific to a payee and can be cashed out by anyone if only it is issued to them and they have authentic identification.
